Is the regulator, Ofgem, listening?

Update Note Dec 08. Originally this blog was called “Ofgem the regulator is listening: Good Stuff” yet we’ve never heard a peep back so I’ve changed the title.

About ten days ago, by coincidence just before the mass of energy price hike news (which is why it’s taken me so long to blog this), I was delighted that three representatives from Ofgem came to MSE Towers to gather info on the energy market and our perspective on it.

As it’s rare for regulators to step outside their ivory towers, it was lovely to have a meet, and especially one instigated by them. They’re meeting a lot of relevant parties for feedback on the ease & experience of switching providers, and the problems people are having.

MSE Archna, who works on gas & elec with me, and I saw it as an opportunity to raise the points we constantly see through e-mails and in the forum as well as to explain some of the problems we have when trying to help people via the cheap gas and electricity guide.

Of course, I also started a special forum thread to ask what MoneySavers wanted to say too. So I thought you’d be interested in what we said.

The Big points

Direct Debit problems.

Many people’s Direct Debits are too high, or too low. So they’re either paying too much or having to fork out for occasional big bills. As Direct Debit is 10% cheaper than other payment methods this is something we want to encourage, yet there are many issues.

The biggest is the fact you don’t have a right to get it altered. My suggestion was a customer rights charter which includes “your direct debit should be reasonable and proportionate to the likely charge, and if it isn’t the company on request should amend it within a set time period.”

This is the biggest issue we see, yet interestingly they said it was something they rarely hear about.

Independent Gas Transporter Problems.

Some people have homes which were new builds and aren’t supplied by Transco, meaning the energy provider has to pay two companies to supply energy to them. Thus when they switch, even though it says they’ll save, they’re soon told they’ll need to pay more because of this.

As most people have no clue they’re supplied by IGTs, some form of clear system is needed to give people legitimate switching expectations.

Prepayment meters costing more.

This is a true injustice as far as I’m concerned. Many of the poorest in society have no choice but to be on a prepayment meter, and yet in doing so they’re also the ones who pay more. This simply doesn’t seem right.

Plus there are some people who use prepay meters, then get big bills. The reason is their meters haven’t been upgraded, so are stuck on old tariffs. According to energy companies’ logic they put “50p in but get 70p worth of energy” and hence they have to make it up later.

Yet for me this is just wrong. There is currently a big push to update all meters, yet I think in the meantime the energy companies should take the hit, if they haven’t updated it.

Switching sites inconsistency.

I never go too public on the fact that try three switching sites, even using kilowatt hours, and you can sometimes get different answers. This is very damaging for their credibility and puts some people who’ve checked off switching. For me the regulator needs to clear up why this is happening.

On a secondary note, as evidenced since the meeting, it’s also a problem that suppliers will sometimes ‘demand tariffs come off switching sites’ but still sell them direct. In the last few days both Scottish Power and Eon have done this. Surely when this happens, it negates the whole point of having switching sites?

If you’re wondering why I don’t go large on these issues publicly, it’s simply because switching sites are the best way to compare and switch (unless you’re willing to spend hours on a spreadsheet yourself), and to diminish their reputation for these small issues would leave people not switching at all, yet stuck on horrible tariffs. So I choose the least worst route.

So those were the biggies, here are some of the others:

Provider Practices.

Selling cheaper Direct Debits as a cheaper product. Door-to-door sales people offering to cut direct debits from £50 to £40 – this doesn’t mean you’re on a cheaper rate, just means they’ve cut the Direct Debit – so it isn’t cheaper at all.

General confusion when it comes to billing. Tier structures and ‘sculptured’ tariffs are now so complex it’s a nightmare for people to understand the bills.

Dropping discounts in the last month of a tariff. Some people are given discounts for signing up, but when they say they’re switching to another provider, these discounts are withdrawn. This is effectively just a penalty for switching.

LPG/Oil

Who do you go to? This is not regulated by Ofgem, and we see lots of complaints about it. We’ve asked for help to find out who’s in charge of regulating it.

Comparison sites.

Transparency of prices and what is being compared on comparisons. When prices go up are you comparing the old tariff or the new tariff?

Some kind of structured to process to ensure comparisons are being updated efficiently. Eg a notice from Ofgem with price changes and a deadline for being updated.

Ofgem should help push the message that the comparison sites are available by the phone. As it’s often the older generation who have less web access who are most at risk of fuel poverty.

All products should be included, such as Staywarm, which isn’t on the vast majority of sites.

Stop encouraging people to ‘switch’ at any time.

The regulator tends to have a compare and switch message. Yet sometimes (like now) you can’t do this, as the playing field isn’t level and by comparing and switching you’ll just be moving to a provider whose price will jump up and could be more expensive.

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